Phinma group secures controlling stake in Cebu university
The Phinma group has cemented its controlling interest in Southwestern University (SWU), the latest tertiary educational institution in its portfolio, by raising its stake to 70.5 percent.
In a disclosure to the Philippine Stock Exchange on Tuesday, Phinma said it had agreed to buy additional shares in SWU equivalent to 10.62 percent from existing shareholders. The block is worth P367.8 million.
The transaction is seen to strengthen Phinma’s position in the education industry. The group is set to spin off its education business into an independent subsidiary in preparation for further expansion and a potential stock market debut by 2017 onwards.
“SWU is a strong education brand in the Visayas and Mindanao with a long tradition of excellence particularly in medicine and the allied health sciences. Phinma Corp. will build on this tradition of the Aznar family, SWU’s founders, and will expand the university’s reach and reputation,” Phinma said in the statement.
With the addition of SWU, the enrollment in Phinma Education’s schools is seen to grow by 10,000 students to 47,000 students, consequently increasing this unit’s revenue and bottom line.
“The Cebu location likewise gives Phinma presence in one of the country’s major education centers, expanding its physical reach and influence. This investment also represents Phinma’s entry into the mid-income education market,” it added.
Incorporated in 1951, SWU was formed to establish, organize, manage and conduct schools and educational institution under the control and supervision of the Commission of Higher Education. It also operates a hospital and medical center known as the Sacred Heart Hospital.
Phinma said the purchase price had taken into account factors such as the number of enrollees, brand value and the appraised values of properties registered under the name of the school. The properties include Sacred Heart Hospital and 240 hectares of land in Cebu.
The acquisition was funded with a loan of P368 million.
The group now has five tertiary institutions in its portfolio. The four others and their respective student population are: University of Pangasinan (10,000-12,000), Araullo University (8,000-9,000), Cagayan de Oro College (12,000), University of Iloilo (10,000-11,000) and Southwestern University (9,000-10,000).
Phinma has earmarked P2 billion for infusion into a new unit that will be incorporated as a holding company for the education business. The amount will allow the new subsidiary to purchase from its parent firm the first four universities under the group. SWU will be folded into this unit later this year and at a separate valuation.
The education unit of Phinma is expected to generate about P1.6 billion in revenue this fiscal year ending March 2016, after breaching the P1 billion mark last year. Last fiscal year’s revenue breached P1 billion with the first four schools in the network.
SWU, which was acquired only in April this year, is seen to contribute P400 million to P500 million in the current fiscal year.–Doris Dumlao-Abadilla
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